News

Compulsory Retirement – The Facts

The qualifying age for the State pension increased to 66 on 1st January 2014. It will further increase to 67 in 2021 and to 68 in 2028. This coupled with a population that is living longer has resulted in many employees wishing to work beyond the traditional retirement age of 65. This can lead to difficulty for employers who wish to enforce a mandatory retirement age.

What has been the historical position?

Traditionally, employers have required employees to retire at 65 (or at another mandatory retirement age prescribed by the employer) and this was usually provided for in an employee’s contract of employment. The Employment Equality Acts 1998 to 2012 (“Employment Equality Acts”) do not prohibit compulsory retirement, however, many recent European cases eroded the legality of these long established practices.

What is the new position?

These recent European cases, which have been followed by the Irish Equality Tribunal, have established that it is discriminatory to compel an employee to retire at a certain age unless there is an “objective justification” for requiring them to do so. Objective justification is not defined in this context, however, various courts have analysed what constitutes objective justification. In general, in order for a particular act by an employer to be objectively justifiable it must (i) correspond to a real need of the employer; (ii) be appropriate; and (iii) be necessary.

The new position in practice – Paul Doyle V ESB International Limited Mr. Doyle was required to retire when he reached the age of 65 and he brought a claim that this constituted discrimination on the grounds of age pursuant to the Employment Equality Acts and also the directive which forms the basis of those acts. There was no retirement age in Mr. Doyle’s employment contract but the Equality Officer was satisfied on the evidence that the employer had a well established practice of compulsorily retiring employees. Mr. Doyle was employed as a graphic designer. The Equality Officer found in favour of the employer for the following reasons:-

• The employer had carefully considered the reasons why the retirement age should be capped at 65 and that it was a clear employment policy of the employer • The work of the employer may give rise to legitimate health and safety concerns for employees aged 65 and over • The carrying out of compulsory medical examinations which may be necessary for employees over 65 may cause embarrassment to some employees • The employer was entitled to maintain a retirement age that ensures cohesion among all of its employees; and • The employer had established a legitimate employment policy with a legitimate aim.

Other examples of “objective justification”

Other examples of objective justification are as follows:- • For health and safety reasons • To create opportunities in the labour market • To increase promotion prospects.

What steps can employers take in practice to minimise the risk of any claim?

• Where employers have compulsory retirement ages, they should continue to provide for these in contracts of employment • Employers should enforce compulsory retirement ages where they do form part of an employee’s terms and conditions of employment. If an employer does not uniformly require employees to retire on reaching the compulsory retirement age, this will dilute any argument an employer may have in relation to compulsory retirement ages • Employers should consider the objective justification for imposing mandatory retirement ages.

European cases, which have been followed by the Irish Equality Tribunal, have established that it is discriminatory to compel an employee to retire at a certain age unless there is an “objective justification” for requiring them to do so.

Employers should consider what the objective justification is for any compulsory retirement age to minimise the risk of age discrimination claims against them.